The Dow Jones Transportation Index, considered to be a proxy of future economic activity, begins trading today at an all-time high.
The 20-stock index closed on July 7 at $5,618.25, continuing a series of trading days where the index has hit all-time highs. The index actually hit an intraday trading high of $5,627.85 before pulling back at the close.
Of the 20 stocks in the index, 15 are in the cargo business in one form or another. The remaining five are airlines that generate the vast majority of their revenue carrying passengers, though they all have ancillary freight divisions.
The index is seen as an accurate gauge of the economic landscape as shipping activity signals demand for goods. Transportation companies are considered leading economic indicators because producers will not commit to shipping unless they are confident of future order flows.
In 2006, for example, trucking companies—which move about 70 percent of all intercity commerce—saw demand fall off sharply, signaling what was the start of a four-year truck recession. Within a year or so, the broader economy had slipped into what would become known as The Great Recession.